EU should fix structural issues hindering innovation

In the face of the European Commission blaming low R&D investment for economic stagnation, a newly elected MEP from Denmark, Stine Bosse, says the issue is not necessarily the amount of public funding, but rather structural problems, like burdensome regulations, that are holding back EU competition and company growth.

Bosse brings decades of business experience in the financial services industry, as a board member of banks and insurance companies, and of public bodies, including as a one time advocate for the UN Millennium Development Goals, to her new position as an MEP representing Renew Europe.

As the new EU parliament finds its feet, there are widespread calls, including from French president Emmanuel Macron, for the Commission to double the budget for the next framework programme, FP10, to €200 billion and invest more in R&D.

While Bosse agrees additional funding is needed, she says there are other issues affecting EU’s ability to innovate and be more competitive. As one case in point, she points to regulatory barriers and length of time taken to navigate the different national rules that have to be followed when setting up companies in the EU, putting innovative European companies at a disadvantage in relation to US and Chinese peers.

Bosse's concerns echo those of former Italian prime ministers Mario Draghi and Enrico Letta, who are now advising the Commission on competitiveness.

In advance of the publication of his report on this issue, Draghi gave a speech in June looking at how the EU could catch up with the US in research and innovation.

In his view – and that of numerous other experts - the EU is worse than US at translating basic research through to marketed products, a factor which Bosse notes, is one of the main issues EU green technologies are facing.

A key challenge is helping companies scale up, enabling them to operate more easily across the single market, Draghi said.

Before that, Letta released his report in April urging the EU to revamp the single market and introduce the ‘fifth freedom’ of the free movement of research, innovation, knowledge and education.

If Europe does not plug gaps in the single market, it will continue to fall behind the US and China when it comes to economic output and competitiveness, Letta said.

Bosse’s answer to the question of how to make the EU as attractive to investors as the US, is through greater regulatory harmonisation and in ensuring EU directives are not interpreted and applied in differently in member states. "We have to make sure that when we have a (EU) directive, it's not implemented in 27 different ways," she said.

Bosse is far from being the first person to call for an end to the inconsistencies that occur when EU directives are translated to national statutes, but she says this needs to be fixed to encourage EU companies and investors to invest in scaling up across in Europe, instead of moving to the US, to access its deeper capital markets.

European start-up associations and stock exchanges are urging EU finance ministers and the European Commission to strengthen the market for initial public offerings in Europe, warning that the continent’s most successful tech and biotech companies are listing on Nasdaq and the New York Stock Exchange, where investors are more receptive and valuations are higher.

Bosse also want to see restrictions on Chinese imports in Europe, saying the EU should be more realistic about the level of the Communist government’s subsidies of industries that are flooding European markets.  

The Commission recently started evaluating import restrictions on Chinese online retailers, and in Bosse’s view, import duties are the right strategy to ensure the EU remains competitive. The EU needs to be tougher on China, while maintaining cooperation, she said.

With negotiations about to begin in earnest on FP10, due to start in 2028, Stine’s view is that it should not predominantly hand out grants, since this does do not provide a direct financial return to the EU. Instead, there should be more emphasis on direct investments, leaving grants to smaller projects.

This would translate into more and bigger companies, including in pharmaceuticals, and boost corporate research in areas including antimicrobial resistance and rare diseases.

The EU should find a way to combine investing and spending on companies and be less averse to risky investments, Bosse said.

Stine Bosse’s background

Before becoming an MEP, Bosse held senior positions including serving as a board member of the Norwegian bank DNB, the financial services company Allianz, Nordea Bank, and pump manufacturer Grundfos. She also served as chair of the Danish European Movement, the Danish green think tank CONCITO, the Royal Danish Theatre, the humanitarian organisation Plan International Denmark, and F&P, the industry body representing insurance and pension companies in Denmark.

She was group chief executive of the Nordic insurance company TrygVesta from 2003 to 2011 and has twice been named by The Financial Times as “one of the most influential businesswomen in the world.”